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.5 

'■'' MANUAL 



Copy 1 

TO AN INTRODUCTION 
TO ECONOMICS 




BY 

GRAHAM A. LAING, M.A. 

ASSISTANT PEOFESSOR OF SOCIAL SCIENCE 
UNIVERSITY OF ARIZONA 



THE GREGG PUBLISHING COMPANY 
NEW YORK CHICAGO BOSTON SAN FRANCISCO 

LONDON 



COPYRIGHT, 1920, BY THE 
GREGG PUBLISHING COMPANY 

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V 

MANUAL TO 
AN INTRODUCTION TO ECONOMICS 

Although the teaching of economics in high schools 
is usually relegated to the commercial department, 
the subject is not purely a commercial one. In the 
preparation of the Introduction to Economics this 
fact has been constantly borne in mind. It has been 
the effort of the author to explain in as simple a manner 
as possible the organization of the present economic 
system. We all admit that the system has many and 
grave defects, but these defects cannot be removed 
unless the system is first understood. 

The object of teaching economics, therefore, is to 
provide the student with a knowledge of the manner 
in which his economic life is controlled and directed, 
so that when he leaves school for the wider life of the 
university and of the world at large there will be at 
Iteast an elementary understanding of the problems 
which face all of us. 

^ It is important that the teacher should understand 
this purpose, for otherwise the teaching might be 
directed toward unimportant matters instead of con- 
centrating on principles. 

It is hardly necessary to say that no teacher can 
hope to treat the subject of economics satisfactorily 

1 



2 MANUAL TO 

with a knowledge gained merely by perusal of the 
textbook. The bibliography given at the end of the 
book is more for the use of the teacher than for the 
student, and the first suggestion that the author would 
make to the teacher is that he or she should make 
a careful study of one or two of the larger works men- 
tioned in the bibliography. Probably the most satis- 
factory would be either Ely's or Seager's text. In 
regard to the individual chapters of the book the 
special works mentioned on each topic need not be 
read in entirety. A glance at the table of contents 
of each will be sufficient to suggest which chapters 
should be specially studied. 

With this preface we can now turn to the various 
chapters of the text itself. 

THE MEANING OF ECONOMICS 

The object of this chapter is to explain the nature 
and scope of the subject and the method by which it 
may be studied. Too much stress should not be laid 
on the method of mathematical logic treated in the 
passage describing the syllogism. If a course in logic 
is given in the school an opportunity for correlation 
will be presented, but otherwise the bare idea of the 
method is all that is necessary. The essential points 
are, the meaning of the term economic law, and the 
relation of economics to other social and physical 
sciences. 

THE THEORY OF ECONOMIC DEVELOPMENT 

In this chapter an attempt is made to emphasize 
the fact that modern institutions are a development 



AN INTRODUCTION TO ECONOMICS 3 

of those of former times. It is extremely important 
that the student should recognize that all change is 
a development conditioned by the past — that new 
ideas do not spring, Minerva-like, full born from the 
brain of Jove, but that they are the result of thought 
devoted to earlier and existing conditions and at- 
tempts to adapt institutions and ideas to new conditions 
as they arise. 

Throughout the book this idea of development has 
been insisted on and many opportunities are left for 
the teacher to illustrate this. Particularly should 
there be correlation with the history studies in this 
connection, as no economic truth can be fully appre- 
ciated without a knowledge of the history which has 
led up to its discovery. 

THE COMPETITIVE SYSTEM 

The main point to be emphasized in this chapter is 
the change from a period of regulated, to a period of 
unregulated industry, with a further period of regulation 
from a new point of view. Competition is a word which 
is frequently used without any attempt at definition, 
and this chapter attempts to limit the meaning in such 
a way that the student can grasp the nature of the 
competitive system satisfactorily. 

The student must be brought to understand that the 
competitive system is, in practice, a rather haphazard 
method of satisfying the desires of human beings and 
that a quasi-philosophical justification has been given 
to the competitive idea. He must see that this jus- 
tification is not nearly so strong as would at first (and 
from a purely logical point of view) appear. Many 



4 MANUAL TO 

facts referred to later on in the book will illustrate 
this, and the teacher can readily supplement these 
from his own experience. The modification of the 
competitive system can be illustrated from each 
locality, however small it may be, and the student 
should be encouraged to find his own illustrations. 

THE MEANING OF PRODUCTION 



t. 



The next two or three chapters are of extreme im- 
portance in the study of the subject, for in a way they 9. 
provide the language necessary for its discussion. 
Colloquial language is so frequently loose and -un- 
defined that in any scientific discussion wherein 
common words are used an accurate definition is es- 
sential. Just as in teaching mathematics it is neces- 
sary that a student know the meaning of such terms 
as straight line, right angle, equation, and so forth, so is 
it necessary in studying economics that he know the 
meaning of the terms wealth, production, consumption, 
and so forth. And it is the more important because 
the words used technically in economics are also used 
colloquially. 

Much is left to the teacher in the way of illustration, 
and each particular locality will furnish illustrations 
which will appeal to the students in a better way, 
perhaps, than those the author has used in the text. 

THE AGENTS OF PRODUCTION 

The remarks regarding the previous chapter apply 
to this one also. The important points to be treated 
are, the nature of capital, and its various forms, and, 
in particular, the immense importance of the principle 



AN INTRODUCTION TO ECONOMICS 5 

of the division of labor. This again can be illustrated 
by the teacher to an unlimited extent. 

THE LAWS OF PRODUCTION 

Before discussing this chapter it would be well to 
recapitulate with the student the idea of economic laws 
so that the explanation given in the first chapter may 
be reenforced by the concrete material in Chapter VI. 

The relation between production and consumption 
should be made absolutely clear and then the laws of 
increasing and diminishing returns should be elaborated 
until there is no doubt left as to their meaning. Their 
importance can be emphasized as well in agricultural 
as in industrial communities and each type will furnish 
its own illustrations. 

THE ORGANIZATION OF PRODUCTION 

This chapter is of great- value in the commercial 
work for it deals to a large extent with those forms 
of organization which are most familiar to commercial 
students. Much of the material may be correlated 
with other studies in the commercial department. 

The idea of development is very clearly presented in 
the chapters dealing with this subject and it should 
be the aim of the teacher to impress on the student 
the fact that each development takes place because 
of the defects in existing organization. This will help 
to emphasize the fact that the present system is in 
a state of flux and that new developments are to be 
expected. It should provide a basis for later discussion 
of the suggestions for industrial reconstruction and for 
a full and intelligent appreciation of the problems 



6 MANUAL TO 

which confront statesmen and business men throughout 
the world. 

VALUE AND EXCHANGE 

The succeeding thirteen chapters deal with the 
problems of exchanging the commodities and services 
that have been produced. In exchange the problem 
of value is naturally of commanding importance. It 
is important that the student realize the difference 
between the ethical and the economic ideas of value. 
There is no necessary antagonism between the two, 
but the points of view are different and the author has 
no wish to detract from the importance of the ethical 
standpoint. The teacher will find in the introduction 
to the chapter on Value, by John Stuart Mill in his 
Political Economy, a very satisfactory treatment of 
these differences and of the necessity for confining 
the economic treatment of value to one point of 
view. 

The marginal idea must be carefully illustrated 
throughout this chapter, especially the idea of marginal 
utility, for the conception is fruitful of meaning in later 
discussions. 

Great stress must be placed on the laws of supply 
and demand and particularly the limitations to the 
application of these laws. The graphic method of 
representing the working of these laws will be found 
most useful, and the students should be encouraged 
wherever possible to construct graphs themselves. 
A useful correlation will be found in work in mathe- 
matics and in the physical sciences, but care should be 
taken to see that the work does not become mechanical. 



AN INTRODUCTION TO ECONOMICS 7 

MONOPOLY AND MONOPOLY PRICE 

This chapter is worthy of careful consideration for 
many of the present day problems are intimately 
connected with the fixation of prices by monopolies. 
Again there is a possibility of correlation with history 
which should not be neglected by the teacher, for, 
wherever possible, the facts stated should be connected 
with facts learned in other studies. There cannot 
be too many points of contact, for it Is of the utmost 
importance that the students should recognize the 
intimate inter-relation of economics and all phases of 
life. 

MONEY 

Properly approached this subject should be found 
one of the most interesting just as it is one which has 
been more scientifically discussed than any other 
economic subject. Illustrations of primitive money 
and money systems abound in American history 
from Indian wampum belts to Virginian tobacco and 
to Confederate currency. 

Many of the problems of the high cost of living are 
closely associated with inflation of currency and many 
crudely thought-out ideas of reforming currency 
methods are suggested from day to day. The dis- 
cussion of the theory of money should help the students 
to form an intelligent opinion of these suggestions. 

THE BANKING SYSTEM 

It will be noticed that the whole treatment of bank- 
ing in the text has been from the functional, rather than 
from the technical, point of view. The author has felt 



8 MANUAL TO 

that the high school student who is interested in the 
technique of banking should study from a special 
text/ but even the technical student should have 
a thorough grounding in banking functions. The 
idea that the banks provide a lubricant for exchange 
— or a sort of storage battery for credit — should be 
emphasized. In all problems of exchange the banking 
function is of extreme importance. 

The treatment has been on the historical method 
so as to bring out once more the idea of development 
and the means whereby one system or institution 
succeeds another, rising, as it were, out of the failures 
of the preceding methods. 

Special attention should be devoted to the Federal 
Reserve System, for it represents the result of the best 
banking knowledge and ability in the world, and has 
attracted attention from all business men throughout 
civilization. No claim has been made that the system 
IS perfect, but an effort has been made to show exactly 
how the defects of the previous system have been 
acknowledged and remedied, and the whole discussion 
provides an illustration of the method of attacking an 
economic failure. 

THE NATURE AND MECHANISM OF TRADE 

This chapter is merely illustrative. The idea was 
to explain the function of the different occupations 
in satisfying the requirements of human beings. 
Necessarily it is incomplete, but it can be rounded 
into greater completeness by illustration and develop- 

1 Holdsworth's Money and Banking is probably the best. 



^ 



AN INTRODUCTION TO ECONOMICS 9 

ment by the teacher. It might be usefully correlated 
with a study of business organization. 

INTERNATIONAL TRADE AND FOREIGN EXCHANGE 

America has leaped to the forefront in the field of 
foreign trade during the past five years, and foreign 
trade is on the lips of every business man. Hence 
a knowledge of the essential principles is of great 
importance to every one who hopes to enter into a 
business life. A great deal of unnecessary difficulty 
has been imparted to the study of foreign exchange. 
Undoubtedly the subject has difficulties to those who 
do not possess the mathematical mind. The essential 
principles, however, are not difficult to understand 
and in practice the technique is fairly easy. The 
author hopes that the explanation given in his chapter 
will be sufficient, but the teacher is urged to read either 
Franklin Escher's book or that of Hartley Withers 
in order to supplement the matter given in the text. 

PROTECTION AND FREE TRADE 

Sufficient material is given for the basis of class 
discussions and even debates on the respective merits 
of tariff systems, and it is suggested that the teacher 
use the debating method to develop the arguments 
pro and con. Additional material may be obtained 
from the works mentioned in the bibliography. 

INVESTMENT AND SPECULATION 

The point to emphasize in this chapter is the 
mechanism whereby the flow of capital is maintained. 



10 MANUAL TO 

In teaching the subject to commercial students the 
manner in which stock exchange speculation is carried 
on may be dealt with more fully, but in all cases the 
important point for the student is the part which 
speculation and investment play in the economic life 
of the community. 

RENT, INTEREST, AND PROFIT 

The theory of rent is one which is given very careful 
treatment in more advanced texts. It seems to the 
author inadvisable to deal with this somewhat difficult 
theory in teaching the subject to young students. 
Sufficient material is given in the text to form a good 
basis for more advanced study. The teacher should 
make clear the fact that the whole of this chapter 
deals with functional and not with personal distribution. 
Local studies in the application of the theory of 
economic rent can readily be made. All students are 
familiar with the term rent itself, and the variations 
in rent of farms or houses in the locality in which the 
student lives can be used to illustrate the theory. 
The analysis of 'profits is worth while treating carefully, 
as much modern discussion turns on the question of 
the relation of profits to industry. 

THE PERSONAL DISTRIBUTION OF WEALTH 

The distinction between personal and functional 
distribution should again be made clear. The teacher 
should first of all avoid the consideration of questions 
of ethics, and show that the present economic system 
leads to the development of certain strong instincts 
which lead to the pursuit of wealth, and then show how 



AN INTRODUCTION TO ECONOMICS 11 

great fortunes are made. This question is the more 
important as there are many books, largely bio- 
graphical, which stress the importance of such things 
as personal character, economy, and savings as the 
causes of great wealth. Without wishing for a moment 
to minimize these qualities and habits, the author 
would prefer to enforce the statement that the essential 
cause of great individual wealth is the possession in 
one form or another of monopolistic privileges. 

The causes of poverty should be discussed at least 
as fully as the causes of wealth. The two are, of 
course, bound up in one another and the complementary 
relation should be established as clearly as possible. 

The analysis of the incentives to work is worthy of 
careful teaching. The teacher will find that his pupils 
are frequently obsessed with the idea that the only 
stimulus to working is the desire to gain money. 
While this stimulus cannot be neglected, it is of great 
importance that the student should realize that the 
money stimulus is so prominent only because of the 
quasi-competitive system which at present governs 
economic life, and that even under the present system 
other stimuli are at work. 

THE REMUNERATION OF LABOR 

This chapter is partly theoretical and partly de- 
scriptive. The emphasis should be placed upon the 
descriptive portions so that the student may know 
what are the various systems by which men are paid 
for their labor, and why sometimes one is preferred 
to another. A complete discussion of the theory of 
wage payments is inadvisable with beginners. 



12 MANUAL TO 

THE ORGANIZATION OY LABOR 

This chapter is one of the most important in the 
book. No question commands such great attention 
as the relations between the labor unions and the 
public, as well as their relations with employers. The 
subject has been treated sympathetically, although ^B 
impartially. It must be left to the teacher to develop 
the details in such a manner that the student may 
understand some of the local, as well as national, prob- 
lems. The teacher, however, should point out very 
carefully the fallacy of reasoning from insufficient 
data. He will frequently find that the students know 
of a particular case which seems to controvert some 
statement made in the text. In the enormous mass, 
of details both of organization and practice it is im- 
possible to consider the individual case unless it is 
typical. The discussion of the right to organize should 
be very careful and complete, in order to show the 
student that unless we are to revert to the chaos of 
the early part of the nineteenth century, this right 
must be allowed, and from this basis the variety of 
the forms of organization should be developed. The 
question of labor-union methods should be carefully 
studied not only in the light of objective facts, but also 
having regard for the psychology both of individuals 
and of groups. 

DISTRIBUTION AND THE LABOR PROBLEM 

The discussion of this subject in the text is admittedly 
inadequate but an adequate discussion should be 
postponed to a time when the student is more mature 
and can devote much more time to the subject. 



AN INTRODUCTION TO ECONOMICS 13 

It may easily happen that a cooperative store is 
opened in the neighborhood of the school, and in that 
case the teacher would be well advised to obtain some 
of the literature circulated from the store for purposes 
of discussion in class. The same may be said of 
schemes of profit-sharing. Most firms which have 
such schemes in operation are quite willing to give 
teachers an outline of their scheme and details as to 
its working. Such discussions of actual cooperative 
or profit-sharing methods will help to give life to the 
study and will undoubtedly increase the interest of the 
students. 

THE ECONOMIC FUNCTIONS OF GOVERNMENT 

The analysis of governmental economic functions 
given in the text is Somewhat unusual, but the author 
feels that it has some advantages. Every local 
government, however small, possesses some of these 
functions and there will be endless opportunity to 
select local problems for discussion. The teacher, 
however, should not confine himself to discussion of 
local problems. To take one example only, the 
question of government ownership or control of the 
railroads or the telegraphs will provide much fruit 
for discussion; this should prove of real value to the 
student in after life when these problems become 
matters about which he has to exercise his franchise. 
No attempt has been made to prejudice the student 
one way or another, and in discussing the subject 
the teacher is urged rather to be a leader in discussion 
than to make any ex cathedra utterances. 



14 MANUAL TO 

PROPOSALS FOR SOCIAL RECONSTRUCTION 

This is the most important chapter with which the 
student must deal. The author has not attempted 
to give any definite conclusions but has only tried to 
show the particularly strong points in favor of, or 
against, certain suggestions. He has also, however, 
tried to introduce the philosophic attitude toward 
the suggestions. Unfortunately it is extremely dif- 
ficult to get at the actual ideas of this group or the next. 
Sometimes the expositors are opponents who do not 
do justice to the ideas, sometimes they are proponents 
who have not fully grasped them; and occasionally 
they are enthusiasts who are apt to become rather 
rhetorical than truly expository. Again many of the 
terms by which reformers describe themselves have 
become through habitual, but often wrong usage, 
opprobrious in themselves and are used as epithets 
instead of descriptive adjectives. This must be care- 
fully avoided by both teacher and student. Terms 
such as radical, socialist, and so forth, should first of 
all be carefully defined and then discussed with full 
regard to the definition. 

Every one with any knowledge of the evils of exist- 
ence for far too many people realizes the fact that our 
present system of economic organization is far from 
being perfect. It is foolish, therefore, to denounce 
any suggestion for improvement until that suggestion 
has been examined with a free and open mind Many 
suggestions will be found absurd. Many will seem 
hopeless. But out of the whole group there will 
undoubtedly rise the germs of the system which shall 



AN. INTRODUCTION TO ECONOMICS 15 

succeed the present. Improvement is only possible 
after careful, open-minded discussion of both problem 
and suggested solution. The essential aim of the 
text has been to provide a ground for such careful 
discussion, so that those students who have studied 
the subject of economics will be able to guide the 
greater number who seem to regard economic knowl- 
edge as a birth gift of every man. 

THE QUESTIONNAIRE 

The questions which follow are suggestive only. 
It is not the intention of the author in any way to 
restrict the teacher as to the nature or number of the 
questions which will help him to discover the extent 
of the student's knowledge. 

The questions can all be answered by a study of the 
text without any additional material, but it is possible 
that in many cases fuller answers would result from 
a perusal of some of the works suggested in the bibli- 
ography. The extent to which the bibliography is 
used will depend largely upon many circumstances 
out of the teacher's control — time to be devoted to 
the subject in the curriculum, library facilities in the 
school and in the public library, and so forth. A wide 
use of the works suggested, however, will make the 
subject of more vital importance to the student and will 
give him a better appreciation both of its difficulties 
and of its value. 

The teacher must remember that the text is only 
what it pretends to be an "Introduction to Economics." 



16 MANUAL TO 

QUESTIONNAIRE 
Chapter I 

1 . What is the essential problem dealt with by economics ? 

2. Define economics and explain your definition. 

3. Why is economics termed a social science? With 
what other sciences is it related ? 

4. Define the term economic law. Distinguish the 
economic law from the act of a legislature. Illustrate the 
difference. 

5. How are economic laws formulated? 

6. Explain the deductive and inductive methods of 
reasoning. 

7. Construct an argument in the form of a syllogism. 

8. Why does the economist seek to discover or establish 
economic laws ? 

9. What is the relation between economics and ethics? 
Do the two sciences overlap one another ? 

10. Does economics teach one how to become rich ? 

Chapter II 

1. How is economic history distinguished from general 
history ? 

2. What is meant by a stage of development ? 

3. State and discuss the four chief stages of development. 

4. Give examples of people who are still living in the 
hunting stage, the pastoral stage, and the industrial stage. 

5. Why is it possible for two stages of development to 
exist at the same time and in the same place ? 

6. What is an economic unit ? 

7. How far does the economic unit coincide with the 
political unit ? 

8. In the development of society, what difference can 




AN INTRODUCTION TO ECONOMICS 17 

be noted between the early improvements and the progress 
of the present day ? 

9. What is meant by a dynamic civihzation ? 

10. Illustrate the fact that the development of civilization 
is accompanied by an increase in the needs of man. 

11. What are conventional necessities .f^ 

Chapter III 

1. How does the modern idea of economic freedom differ 
from the medieval ideas of controlled industry? 

2. How did the idea of economic freedom arise ? 

3. State and explain the theory of production for 
profit as the most satisfactory system of economic organ- 
ization. 

4. What was the Irish rack-renting system? How do 
the effects of this system help to prove the correctness of the 
theory of production for profit ? 

5. Explain the idea of Competition. 

'^^ Is there such a thing as competition between capital 
and labor ? 

7. Labor is sometimes treated as if it were a commodity, 
like wheat or coal. Is this a satisfactory treatment? (See 
Chapter XXVI.) 

8. What are the defects of the competitive system ? 

9. What is meant by laissez-faire and laissez-aller? 

10. How is the harshness of the competitive system 
modified at present ? 

11. Is modern regulation of industry of the same char- 
acter as the medieval regulation? 

12. Why are factory acts necessary ? 

13. What is the difference between individual and col- 
lective bargaining ? 

14. Define the term, freedom after considering the subjects 
treated in this chapter. 



18 MANUAL TO 

Chapter IV 

1. How does custom affect a man's idea of what is 
necessary to life ? 

2. How would you distinguish between a high and a low 
state of civilization ? 

3. Define the term wealth and analyze your definition. 

4. What was Ruskin's definition ? Why is it unsatisfac- 
tory from the economist's point of view? 

5. Give an illustration of a form of wealth, ordinarily 
free to every one, becoming economic wealth. 

6. What is a utility? Distinguish between utility and 
usefulness. 

7. "In the satisfaction of our desires we consume 
utilities." Discuss this statement. 

8. Is production determined by consumption or vice 
versa? Justify your answer by a full argument. 

9. Define Production. Explain your definition. 

10. Which of the following, if any, may be regarded as 
producers ; what do they produce : a railroad ticket 
collector, a moving picture actress, a member of Congress, 
an advertising agent, a pearl diver, a grocer, a dentist? 

Chapter V 

1. Define and discuss the term land as an agent of pro- 
duction. 

2. What is meant by labor ? 

3. Define the term capital. Illustrate the use of capital. 

4. "Whether a particular form of wealth is capital or 
consumer's wealth depends upon the use to which it is put." 
Discuss and illustrate this statement. 

5. Which of the following goods may be termed capital 
goods : 

(1) A printing press, owned by a manufacturer of printing 
machinery, in transit to a newspaper company ? 



AN INTRODUCTION TO ECONOMICS ly 

(2) The same press in the ownership of the newspaper 
company ? 

(3) An electric washing machine in a private house? 

(4) Coal in a steel mill ? 

6. Define fixed and circulating capital. 

7. Of the following capital goods, which are fixed and 
which circulating capital : coal in a steel smelter ;, lumber 
in a furniture factory ; a factory building ; paper in a news- 
paper office; a printing press in the same office; a pile 
driver in a shipyard; steel plates in a shipyard; coconut 
oil in a margarine factory ; a cream separator in a dairy ? 

8. Is a treasury note for $1000 capital? Justify your 
answer. 

9. Discuss the value of the principle of division of 
labor. 

10. How does the development of habits affect this prin- 
ciple ? 

11. Give a brief explanation of the scientific organization 
of labor. 

12. How is specialization of industry a determinant of 
the localization of industries? Illustrate. 

Chapter VI 

1. How is production stimulated by profits? 

2. Production is secured through the application of 
capital and labor to natural resources. Explain this state- 
ment. 

3. What is meant by a dose of capital and labor ? Is the 
dose an actual fact or a hypothetical conception ? 

4. State and illustrate the law of increasing returns. 

5. Where would you expect to find the best illustration 
of the working of this law — in agriculture or in industry ? 
Why? 

6. State and illustrate the law of diminishing returns. 



20 MANUAL TO 

7. Why is this law sometimes termed the law of diminish- 
ing productivity ? 

8. In Figure I, if the normal return were reduced to 
thirty bushels, what would be the marginal dose of capital 
and labor ? 

9. John Brown is running a small factory at a normal 
profit of five per cent. The law of increasing returns is in 
operation in his business. Will it pay him to increase his 
capital by borrowing money at five per cent? Why? 
When should he cease to borrow ? 

Chapter VII 

1. Distinguish between Business and Industry. 

2. Give a short account of the method of early foreign 
trade. 

3. How did the Venetian and Genoese fleets differ 
from the fleet of the Cunard Line? 

4. What was the reason for the early formation of 
partnerships? 

5. Describe the organization of a regulated company. 

6. What was meant by a Chartered company? Why 
was a charter necessary? 

7. State and discuss the advantages and disadvantages 
of partnerships. 

8. Describe the early form of Joint Stock companies. 

9. Discuss the principle of limited liability. 

10. How is a modern corporation governed ? 

11. How does a bond holder differ from a stock holder? 

12. What has been the effect on business of the growth 
of corporations ? 

13. How has the corporation organization Improved 
banking business ? 

14. Discuss the advantages of department and chain 
stores. 



• 



AN INTRODUCTION TO ECONOMICS 21 

Chapter VIII 

1. Give an account of early agriculture. 
%. What is meant by the three-field system? Was it 
an improvement on the biblical method? 

3. What is the difference between communal tillage 
and communal ownership ? 

4. What difficulties were placed in the way of progress 
by communal tillage under the three-field system? How 
were these difficulties overcome ? 

5. Discuss the difference between intensive and ex- 
tensive cultivation. What circumstances determine the 
use of the one or the other? 

6. Modern farming makes a much greater use of fixed 
capital than the earlier methods. Explain this. 

7. Discuss the relation of maiiufacture to agriculture 
in early times. 

8. Give a short account of the Gild system. 

9. How did the Gild system break down? 

10. Describe the evolution of the factory system. How 
did it differ from the domestic system? 

11. What is the relation of the increased use of fixed 
capital to the principle of division of labor? 

12. What are the advantages and disadvantages of the 
factory system ? 

13. Describe carefully the factors to be considered in 
fixing the location of an industry. 

14. What are the duties of the production manager, the 
office manager, and the sales manager? 

15. Describe and discuss Scientific Management. 

Chapter IX 

1. Why has unrestrained competition failed? 

2. In what respect does the corporation method of 
organization tend to eliminate or modify competition? 



22 MANUAL TO 

3. How are price agreements used to eliminate com- 
petition? Is this a satisfactory method? 

4. What steps have been taken or suggested to enforce 
obedience to price agreements? 

5. Give an example of the working of a price agree- 
ment. 

6. Explain and illustrate the Kartel. What are Selling 
Bureaus ? 

7. Describe the method of the pool and discuss its 
difficulties and advantages. 

8. What is a monopoly? Is it possible for all occu- 
pations to become monopolies? 

9. What is the colloquial meaning of the monopoly 
form known as the trust? What is the technical meaning? 
How did the idea originate? 

10. Describe the system of the Holding Corporation. 

11. What is a proxy and how is it used? 

12. How much stock must be held in order to control a 
corporation ? 

13. What is the essential aim of all monopolies ? 

14. Discuss the effects of monopoly organization. 

15. Ought monopolies to be controlled by Government? 
Why? 

16. State the arguments in favor of monopoly organ- 
ization as strongly as possible. 

17. Reply to the arguments in the answer to question 16. 

Chaptee X 

1. Discuss the term value as used in ordinary speech 
and as used in economics. 

2. Why is it necessary to limit the meaning of the 
word in economics ? 

3. Explain the law of diminishing utility. Sum up 
your explanation by a concise statement of the law. 



AN INTRODUCTION TO ECONOMICS 23 

4. Explain the meaning of the term marginal utility. 
Give a concise definition of the term. 

5. What is the difference between a given satisfaction 
or utiUty at present and in the future? 

6. Children and savages are said to "discount future 
satisfactions at a high rate." What is meant by this? 
W^hy should there be a difference between the child or 
savage and the civilized adult? 

7. Show the difference between desire and demand. 
What is meant by effective demand? 

8. Define the term price. 

9. What is the effect of a change of price on the effec- 
tive demand and supply of a commodity ? 

10. Explain the phrase "intensity of demand." 

11. Explain and illustrate the term elasticity of demand 
and supply. 

12. What effect does the presence of substitutes have on 
the elasticity of demand for a commodity? 

13. What is the meaning of latent demand ? 

14. What difference is usually seen in the elasticity of 
demand between necessities and luxuries? Explain the 
difference. 

Chapter XI 

1 . What is meant by a strong and a weak buyer or seller ? 
Illustrate. 

2. Using Figure III as a basis, how many tons of coal 
would be purchased at the following prices : $3.00, $7.00, 
or $17.00? 

3. What would be the consumer's surplus at each of 
these figures ? 

4. Using Figure IV as a basis, state the available supply 
at the same prices'. 

5. What would be the producer's surplus in each 
case ? 



24 MANUAL TO 

6. From the following data construct supply and de- 
mand curves and indicate the market price as in Fig. V. 

Supply Demand for Potatoes in Tons 

. DEMAND PBICE, CENTS PER LB. SUPPLY 

50,000 1 4,000 

40,000 2 8,000 

35,000 4 12,000 

32,000 5 18,000 

25,000 7 24,000 

18,000 10 30,000 

12,000 15 35,000 

8,000 20 40,000 

5,000 25 50,000 

7. Define the term market and explain your definition. 

8. What is meant by Normal Price? 

9. What relation exists between Normal Price and 
Market Price ? 

10. What assumptions are necessary before one can argue 
that market price is determined by the interaction of the 
laws of supply and demand ? 

11. What is meant by the flow of capital? 

12. How are the upward and lower limits of prices af- 
fected by the flow of capital? 

Chapter XII 

1. Why is it important that prices should be stable? 

2. Is there any difference in principle between the 
Elizabethan monopolies and a modern patent or copyright? 

3. What justification is there for the granting of copy- 
rights and patents ? 

4. How does a patent differ from a trademark ? 

5. Would you consider the granting of a copyright in 
a trademark justifiable ? Why ? 

6. Discuss the question of monopoly of location. 




AN INTRODUCTION TO ECONOMICS 25 

7. What is the essential purpose of monopoly ? 

8. Define monopoly. Explain your definition. 

9. Does monopoly control inevitably cause an increase 
in price ? 

10. How is a monopoly price fixed ? 

11. What are the upper and lower limits of monopoly 
price ? 

12. What is meant by latent competition ? 

13. How is latent competition affected by the necessity 
of large expenditures in fixed capital ? 

14. Is a trust or a holding corporation necessarily a 
monopoly ? 

15. How is the price of a product, monopoly controlled, 
affected by its elasticity of demand? 

Chapter XIII 

1. Whsit is barter ? Illustrate. 

2. What are the chief disadvantages of barter exchange ? 

3. Would it be possible to carry on all our present 
economic activities under a system of barter .^^ 

4. Name ten commodities that have been used as money. 

5. The early colonists of Virginia used tobacco as 
money. What disadvantage would you think existed with 
this currency ? 

6. Give a list of the qualities desirable in a money 
commodity. 

7. Which of the qualities would you consider to be 
essential ? Why ? 

8. Why do you think some qualities, while desirable, are 
not essential ? 

9. What disadvantage do the metals possess as currency ? 

10. What is a coin? How did coins originate? 

11. Explain the terms milling and sweating as applied 
to coins. 



26 MANUAL TO 

12. What is the purpose of an alloy ? 

13. Explain the method of debasing coinage. 

14. What effects result from excessive debasement of 
coinage ? 

15. Explain payment by tale. 

16. Why does debasement of coinage affect poor people 
more than rich ? 

Chapter XIV 

1. Explain the meaning and origin of the term seign- 
iorage. 

2. Can the assay charge of the United States be con- 
sidered seigniorage ? 

3. State Gresham's Law and give a full explanation of 
its working. 

4. What is meant by subsidiary coinage? Why is it 
necessary ? 

5. Why does not Gresham's Law act to drive token 
money out of circulation ? 

6. Is there any necessary relation in commodity value 
between a gold eagle and a silver half-dollar ; or a nickel .? 

7. What is meant by bimetallism? 

8. How does Gresham's Law operate to prevent the 
continuance of a bimetallic system? 

9. Silver dollars are legal tender in the United States 
for any amount. So, also, are gold coins. Why do not the 
silver dollars drive, out the gold, or vice versa, according to 
Gresham's Law ? 

10. Upon what do the various forms of paper money 
depend for their value? 

11. Define the term price. 

12. How does the supply of gold affect price ? 

13. How can the value of gold be stated? Can you 
speak of fluctuations in the price of gold ? 



AN INTRODUCTION TO ECONOMICS 27 

14. What effect have changes in the rapidity of circulation 
on the purchasing power of money? 

15. Explain the equation p = — — (Fisher's Equa- 

T 

tion) . What do each of the terms mean ? 

16. Why are there fluctuations in the demand for currency ? 

17. What do you mean by an elastic currency .^^ 

18. Why is an elastic currency necessary ? 

19. What is Fiat Money ? Give an example. 

20. Define currency inflation. Why should currency 
inflation be avoided ? 

21. Explain the use of index numbers to estimate changes 
in the value of money. 

Chapter XV 

1. What is meant by credit? Give an example of a 
credit transaction. 

2. Why nmst credit be organized ? 

3. "Banks are the lubricants of commerce." Explain 
this statement. 

4. Are modern banks direct descendants of the Assyrian, 
Greek, and Roman Systems? 

5. Describe the evolution of the deposit system. 

6. Why should interest be paid on deposits? Would 
there be bank deposits if no interest were paid? 

7. Describe the evolution of the bank loan. 

8. What was the origin of the bank note ? 

9. Explain how currency is eliminated by means of the 
bank deposit. 

10. Why are deposit reserves necessary? 

11. Explain the operation of the clearing house. What 
is the function of the clearing house ? 

12. What are meant by Debtor and Creditor Banks in the 
Clearing House ? 



28 MANUAL TO 

13. If a bank is constantly a debtor bank, what will be 
the result ? 

14. In what forms may a bank loan be made.f^ 

15. Why is the deposit loan the principal form.^ 

16. What is an accommodation loan ? Illustrate. 

17. What is a capital loan? Upon what security will 
a bank lend money for capital purposes ? 

18. Define Commercial Loan. Illustrate the making 
of a commercial loan. 

19. What is a discount.? Illustrate. 

20. If a man obtains a loan by pawning a watch, which 
type of loan is represented .^^ 

21. How does a banker profit on lending money? 

22. When a bank makes a loan in deposit form, no actual 
money is involved. The loan is "an extension of credit." 
Explain this. 

23. What is the value of the discount system ? 

24. How does a bank note differ from a private promissory 
note ? 

25. How are bank notes safeguarded against depreciation ? 

Chapter XVI 

1. State the chief drawbacks of the banking system of 
the United States previous to 1863. 

2. What three problems faced the Government which 
passed the National Banking Act? 

3. Why did the Act place limitations on the amount 
of capital required for a bank? 

4. Why should more capital be required for a bank in 
New York than for one in El Paso, Texas? 

5. Why did the Government insist on the banks pur- 
chasing bonds with their capital? 

6. What compensation did the banks receive for this 
expenditure ? 



AN INTRODUCTION TO ECONOMICS 29 

7. Distinguish between Central Reserve City banks, 
Reserve City banks, and Country banks. 

8. Explain the method of keeping reserves in each of 
the three classes. 

9. Why were bank examinations instituted? 

10. How was the right of issuing bank notes limited to 
National banks ? 

11. What is a bank note ? 

12. What two points must be considered in determining 
the security for a note ? 

13. Why should a bank note be safeguarded by the 
Government ? 

14. How are holders of National bank notes secured as 
regards the ultimate redemption of their notes .^^ 

15. What provisions are made for immediate redemption ? 

16. Were the National bank notes any improvement 
on those issued before the passing of the Act ? Why ? 

17. National bank notes are perversely elastic. Explain 
this fully. 

18. What advantages had the reserve system of the Na- 
tional Banking Act on the unregulated reserves of the 
previous period ? 

19. Do you think it is the business of the Government to 
regulate reserves ? Why ? 

20. Criticize the method of keeping the reserves under 
the National Banking Act. 

21. Why do banks maintain deposits with each other .^^ 

22. What is a call loan ? 

23. When and for what purposes are most call loans 
made? 

24. How are call loans usually secured? 

25. What happens to the security during a crisis or panic ? 

26. How does the panic condition affect the reserves 
deposited in the Central Reserve City banks ? 



30 MANUAL TO 

27. Was it possible to "mobilize" the cash reserve in 
the vaults of the individual banks? 

Chapter XVII 

1. How may reserves be controlled by individual banks ? 

2. What effect is produced on business conditions by 
a sudden stoppage of loans ? 

3. How may the discount rate be used to increase 
reserves ? 

4. What are re-discounts? Why are they a valuable 
method of utilizing available capital ? 

5. Describe the organization of the Federal Reserve 
Board. 

6. How are the Federal Reserve Banks capitalized ? 

7. How are the directors of the Federal Reserve Banks 
appointed? Give reasons for the method. 

8. How are the profits of the Federal Reserve Banks 
distributed? 

9. What is the distinction between time and demand 
deposits ? 

10. Was this distinction made, as far as reserves are 
concerned, under the National Banking Act? 

11. Why should there be a difference in the reserves for 
time and for demand deposits? 

12. State the proportion of deposits (demand and time) 
which must be maintained as reserve in the three classes 
of banks. 

13. How are the reserves kept? 

14. How does the Federal Reserve System provide a 
re-discount market ? 

15. What types of loans are re-discountable under the 
Federal Reserve Act ? 

16. What influence is exerted by this re-discount process 
in controlling panics and crises? 



AN INTRODUCTION TO ECONOMICS 31 

17. How do commercial crises arise? 

18. How does the Federal Reserve Bank use its discount 
rate to maintain its own reserves ? 

19. What proportion of deposits must be kept as a re- 
serve by the Federal Reserve Bank? 

20. Is there any distinction between demand and time 
deposits in the Federal Reserve Bank ? 

21. Explain the method of issuing Federal Reserve 
notes. What security is used to safeguard the issue (a) 
ultimately, (6) immediately ? 

22. Estimate the risk of failure to meet the commercial 
paper at maturity. 

23. What titles are given to the Chairman and Vice 
Chairman of the directorate of a Federal Reserve Bank? 

24. What are the functions of these two officers ? 

Chapter XVIII 

1. Why are Federal Reserve notes a good form of 
elastic currency? Explain fully. 

2. Federal Reserve notes have been criticized as being 
inflated currency. Examine this criticism. 

3. What are Federal Reserve bank notes ? How do they 
differ from Federal Reserve notes ? 

4. What is the purpose of the issue of Federal Reserve 
bank notes ? 

5. What provision is made for the retirement of bonds 
to secure National bank notes ? 

6. What is the basis for estimating the cost of keeping 
reserves ? 

7. Compare the cost of keeping reserves of a Reserve 
City bank under the National Banking Act and under the 
Federal Reserve System, assuming that the Reserve City 
bank deposits contain ten per cent, time, and ninety per 
cent, demand, deposits. 



32 MANUAL TO 

8. Explain the way in which the directors of the Federal 
Reserve Banks can recognize the signs of an approaching 
crisis. 

9. What steps can be taken to avert the crisis ? 

10. How can reserves be mobilized under the Federal 
Reserve System ? 

11. What means are adopted by the Federal Reserve 
Board to control the operation of the member .banks .^^ 

12. Explain window dressing. 

13. Describe the essential differences between the Cana- 
dian Banking System and the Federal Reserve System ? 

14. What equivalent for a re-discount market is possessed 
by the Canadian banks? 

15. How are Canadian banks related to one another .^^ 

16. How are Canadian bank notes secured ? 

17. How are they redeemed ? 

18. What happens in case a bank fails ? 

Chapter XIX 

1. What is the essential purpose served by money in 
trade ? 

2. Why is money necessary ? 

3. Describe a complete transaction in trade showing 
how standard money is eliminated and the credit system 
used. 

4. What is a Trade Acceptance and how is it. used ? 

5. What are the advantages of the use of Trade Accep- 
tances ? 

6. "Banks act as the flux of trade." Explain this. 

Chapter XX 

1. Distinguish between the political and the economic 
point of view in defining the word nation. 



AN INTRODUCTION TO ECONOMICS 33 

2. Do domestic and international trade differ in any 
essential ? 

3. What is meant by the law of comparative cost ? 

4. International trade has been called the territorial 
division of labor. What is meant by this ? 

5. What are the benefits of international trade? 

6. Are there any disadvantages ? 

7. What effect had the war upon the international 
trade of the United States ? 

8. Give a concrete illustration to show the factors that 
enter into the determination of international value. 

9. Steel rails are both exported from and imported 
into the United States. How is this ? 

10. How is the equation of price in international trade 
maintained ? 

11. How does the cost of transport affect international 
prices ? 

12. The wealth of a country used to be considered as 
depending upon the amount of the precious metals possessed 
by that country. Criticize this idea. 

13. Explain the theory of the Balance of Trade. 

14. What is meant by the phrase "equation of satis- 
faction"? 

15. Explain the theory of the equation of indebtedness. 

16. What is meant by the expression "invisible exports 
or imports"? Illustrate. 

17. In a given year a country is said to have an adverse 
balance of trade. Is this necessarily an indication that the 
country is in an unsafe economic condition ? 

Chapter XXI 
1. A storekeeper in Seattle, Washington, purchases, 
direct from the factory, a cash register from the National 
Cash Register Company, Dayton, Ohio. What different 
methods of payment may he adopt? 



34 MANUAL TO 

2. What elements enter into the cost of shipping gold 
or currency ? 

3. When does it pay to ship currency instead of using a 
draft ? 

4. What is a correspondent bank ? What purpose does 

it serve ? 

5. A citizen in Tucson, Arizona, wishes to make a pay- 
ment to a dealer in Kansas City, Missouri. Upon what 
city is his draft likely to be drawn ? Why ? 

6. Explain mint par. 

7. What is the mint par of exchange of the English 
pound ? 

8. What expenses must be considered in shipping gold 
from the United States to England? 

9. What are the gold points ? 

10. Is there any difference between the theoretical and 
the practical gold points? 

11. What is meant by Sterling Exchange? 

12. Why is Sterling Exchange of so great importance in 
Foreign Trade ? 

13. What is a Documented Bill? 

14. Why is the Bill of Lading essential to the Documented 
Bill? 

15. What is a Letter of Credit? 

16. Explain the whole process of financing a shipment 
from Buenos Aires, Argentina, to New York, assuming that 
Sterling Exchange is used. 

17. How does the Acceptance differ from the Documented 
Bill? 

18. What is meant by the Discount Market? 

19. How is a draft discounted? 

20. What is a Finance Bill ? 

21. Explain the difference between a Finance Bill and 
a Commercial Bill. 



AN INTRODUCTION TO ECONOMICS 35 

22. Why are Finance Bills necessary? 

23. State some of the circumstances which help to 
determine the rate of exchange. 

24. Why should a higher rate of exchange rule for cable 
transfers than for sixty-day paper ? 

25. Explain the effect of interest rates on the rate of 
exchange. 

26. Discuss the causes of gold movements. 

27. Has the Balance of Trade any real influence over 
gold movements ? 

28. What is meant by Arbitrage ? 

Chapter XXII 

1. Distinguish between revenue and protective duties. 
Give examples. 

2. Distinguish between direct and indirect taxation. 
Give examples. 

3. Discuss the effect of protective duties on home 
prices. 

4. Is the price of a commodity necessarily increased by 
the whole amount of the duty when a protective tax is 
imposed? State three possible situations. 

5. Give a full account of the argument in favor of 
protecting young industries. 

6. Reply to the argument given in answer to question 5. 

7. How does the law of comparative cost come into 
the discussion of protection of young industries ? 

8. When w^ould you say that a young industry has 
reached its majority ? 

9. What usually happens to the agreements in favor of 
protecting an industry when this industry can no longer 
be considered young ? 

10. What is meant by the National System? Give a full 
statement making the argument as strong as possible. 



36 MANUAL TO 

11. Reply to the above argument. 

12. State fully the mercantilist argument. 

13. Answer the above argument. 

14. Distinguish between high wages and high labor 
cost. Are the two necessarily or commonly synonymous ? 

15. Discuss the cheap labor argument. 

16. Explain the meaning of dumping. 

17. What conditions are necessary before dumping can 
be successf ul .f^ 

18. Is dumping a permanent method of securing foreign 
trade ? 

19. Sum up the arguments pro and con in regard to 
Protection and Free Trade. 

20. What difficulties would arise if an absolutely Free 
Trade System were to be suddenly established in the United 
States ? 

21. Are these difficulties a sufficient answer to the Free 
Trade arguments ? 

Chapter XXIII 

1. What difficulties lie in the way of transferring fixed 
capital from one industry to another.? 

2. What is meant by Investment? 

3. Whsit is the flow of capital? 

4. State some of the chief considerations which deter- 
mine the investment of capital. 

5. Describe the difference between par and investment 
price. Illustrate. 

6. What is meant by discount and premium ? 

7. "In every aspect of business the future is, to a certain 
extent, discounted." Explain this sentence. 

8. State the difference between investment and specu- 
lation. 

9. Is it possible to eliminate the element of risk from 
business ? 



AN INTRODUCTION TO ECONOMICS 37 

10. What is meant by speculative investment? Illustrate. 

11. Describe the method of stock exchange speculation. 

12. What is a margin ? 

13. What is co//a^era/ .^ 

14. Describe the process of short-selling. 

15. Speculation is said sometimes to assist in stabilizing 
prices. State and criticize this argument. 

16. What is meant by hearing stock "^ 

17. How do stock manipulators make use of the psycho- 
logical effect of price movements } 

Chapter XXIV 

1. Distinguish between the mechanical process of 
distributing products and distribution as an economic 
problem. 

2. Among what three classes are the results of pro- 
duction distributed? 

3. Distinguish between impersonal or functional dis- 
tribution and the personal distribution of wealth. 

4. Has the science of ethics anything to do with 
functional distribution "^ 

5. Explain fully the doctrine of economic rent. Could 
you use a diagram similar to Figure I, page 74, to illustrate 
this doctrine? 

6. What is meant by the margin of cultivation ? 

7. What is the equivalent of the margin of cultivation 
in urban districts ? 

8. How does the doctrine of rent apply to the case of 
a farmer who owns his farm ? 

9. Distinguish between urban and agricultural rents. 

10. What factors enter into the determination of the 
" rent " paid for a residence ? 

11. What is meant by rent of ability? How is the idea 
related to economic rent? 



38 MANUAL TO 

12. Discuss the medieval ideas regarding payment of 
interest. 

13. A lender receives interest on the loan because he 
foregoes the use of the sum loaned, and is therefore unable 
to make a profitable use of it himself. Discuss and criticize 
this statement. 

14. Interest is paid because of the difference in marginal 
utility between a present and a future satisfaction. Ex- 
plain and criticize this statement. 

15. Distinguish between interest and usury. 

16. Analyze the term 'profits. 

17. What is meant by insurance of non-insurahle risk ? 

18. What is the difference between the objective and the 
subjective estimate of risk.^^ Which is usually the higher 
estimate ? 

19. To the summary analysis on page 332 there might 
be added to (4) a final item, (c) Rent of opportunity. Ex- 
plain and illustrate this last item. 

Chapter XXV 

1. Discuss the common tendency to speak of ''the good 
old days." 

2. Has the general standard of living been raised or 
lowered since colonial days ? 

3. Is the present distribution of wealth satisfactory? 

4. What are the four chief causes of great individual 
wealth ? 

5. Discuss each cause and state which is the most 
important. 

6. The foundations of great wealth lie in the industry, 
integrity, and economy of the possessor. Discuss and 
criticize this statement. 

7. List the chief causes of poverty. 

8. Examine each cause and estimate the most important. 



AN INTRODUCTION TO ECONOMICS 39 

9. Is irregular employment a necessary producer . of 
poverty ? 

10. What is meant by social maladjustment? 

11. Discuss the relationship of thriftlessness to poverty. 

12. Discuss each of the following as an incentive to search 
for wealth : 

(a) The will to live, (h) The acquisitive instinct, (c) 
Emulation, (d) The will to power. 

13. Admitting the evils of the present system, is it necessary 
to abolish the instincts mentioned in the answer to question 
12 before improvement is possible ? 

14. Is work a blessing or an evil, or a combination of both ? 

15. Should work be regarded as a means to an end or an 
end in itself .^^ 

16. Why is it folly to ask underpaid laborers to save ? 

17. It is frequently said that modern methods have de- 
stroyed the spirit of craftsmanship. Is this true ? 

18. In what respect does the "joy of working" exist in 
a highly specialized factory .^^ 

19. What is meant by the organizing instinct.? How 
can this instinct affect the work of a salesman ? 

20. How can the work of a draftsman make use of the 
creative instinct ? 

21. Discuss the value and disadvantage of the dominating 
spirit. 

Chapter XXVI 

1. Discuss the meanings of the word labor. 

2. What is the modern tendency in regard to meaning 
of labor ? 

3. Describe labor's part in production. 

4. Is it right to speak of labor as a commodity subject 
to the same conditions in exchange as physical commodities ? 

5. Criticize Nietzsche's view of labor as stated on page 358. 

6. Describe the Iron law of wages. 



40 MANUAL TO 

7. How is the iron law affected by the behef in a minimum 
standard of hving? 

8. The Malthusian theory of population is briefly stated 
on page 360. Discuss this theory. 

9. Distinguish between money and real wages. Why is 
the distinction important? 

10. What are the advantages and disadvantages of time 
wages ? 

11. What are the advantages and disadvantages of piece 
wages ? 

12. Why do trade unions sometimes approve and some- 
times disapprove of piece wages } 

13. Explain and discuss bonus systems. 

14. Criticize the ideas and workings of Scientific Manage- 
ment. 

Chapter XXVII 

1. What was the theory of laissez faire? 

2. How did unlimited competition affect the condition 
of the wage earner .^^ 

3. What was the origin of labor organization ^ 

4. Is there any real connection between the gild system 
and the trade union.? 

5. Wliy should the right to organize be recognized .f^ 

6. Define a trade union. 

7. What is a craft-union "? 

8. What is the value of a national organization? 

9. Discuss the analogy between the American Federation 
of Labor and the government of the United States. 

10. Distinguish between craft and industrial union. 

11. To which type does the I. W. W. belong? 

12. What tendency in the labor movement is illustrated 
by the rise of the shop steward ? 

13. Discuss the question of collective bargaining. 



AN INTRODUCTION TO ECONOMICS 41 

14. What are the advantages and disadvantages of the 
standard wage ? 

15. Why do all the trade unions insist upon a standard 
minimum wage ? 

16. What are the general aims of trade unionists in regard 
to conditions of labor? 

17. The problem of the hours of labor is being more 
earnestly discussed now than at any time previously. Why 
is this ? 

18. What do you think of the six-hour day proposal ? 

19. What is the general attitude of trade unions toward 
child labor ? • 

20. Discuss the right to strike from the points of view of 
laborers, employers, and the public. 

21. Should the prohibition of the right to strike involve 
the prohibition of lockouts ? 

22. Discuss fully the difference between arbitration and 
conciliation, and show the advantages and disadvantages of 
each. 

23. How is the boycott used by trade unionists? What 
similar method is adopted by employers ? 

24. How is the union label used ? What is its purpose ? 

25. Estimate the success of the trade union movement. 

26. Do you think that workmen could afford to dissolve 
their unions ? 

27. If you believe that the right to strike should be refused 
to employees in public utilities, what steps do you think 
should be taken to protect the employees? 

Chapter XXVIII 

1. Why do apparently trivial causes arouse bitter dis- 
putes ? 

2. What four criticisms of social organization are made ? 

3. Discuss Profit Sharing. 



42 MANUAL TO 

4. Criticize the general principle of profit sharing. 

5. What are the objects to be achieved by the introduction 
of profit sharing? 

6. Profit-sharing schemes are sometimes characterized 
as "union-breaking schemes." Is this a just criticism? 

7. How are these schemes expected to break the unions ? 

8. Is profit sharing a real solution of the labor problem? 
Give reasons for your answer. 

9. What are the two chief viewpoints from which co- 
operation may be regarded ? 

10. Discuss the difference in the problems which arise 
between the two forms'. 

11. Give anputline of the organization of the Rochdale 
Pioneers. 

12. How do jobbers and wholesalers regard small con- 
sumers' cooperative societies ? 

13. What methods have been adopted by the cooperative 
societies to secure a good, wholesale service ? 

14. Why has consumers' cooperation not been so success- 
ful in America as it has been in Europe ? 

15. What difficulties have arisen in regard to running 
productive cooperation ? 

16. Does cooperation supply the real remedy for bad 
distribution of wealth ? 

17. Why is taxation necessary ? 

18. What functions must be performed by government 
that private enterprises will not or cannot undertake ? 

19. What principle should be adopted in order that 
taxation should be equitable ? 

20. Why is equality of taxation not the same as equity ? 

21. What difficulties does the legislature find in levying 
taxes ? 

22. Describe what is meant by progressive taxation. 
Illustrate. 



AN INTRODUCTION TO ECONOMICS 43 

23. Why should unearned incomes be taxed at a higher 
rate than earned incomes? 

Chapter XXIX 

1. Name the three forms of government economic 
activity. 

2. Why is it necessary that the laws of contract be well 
formulated and strictly enforced.? 

- 3. Give five examples of protective functions of govern- 
ment. 

4. An essential difference exists between the regulation 
of trade by government in medieval times and at present. 
What is this difference ? 

5. Why is government regulation of the conditions of 
labor necessary ? 

6. Give examples of this regulation. 

7. What variety of industry usually requires careful 
regulation by government ? 

8. State the arguments against government ownership 
of industry. 

9. State the arguments in favor of government owner- 
ship of industry. 

10. Sum up the case stated in the last two answers. 

11. Why should a system be judged for its success or 
failure by its action in times of crisis ? 

12. How did the competitive system function during the 
war? 

13. What were the reasons which led the government to 
undertake the control and operation of the railroads during 
the war ? 

14. Describe the government activities in creating an 
American Merchant Marine. 

15. Could this work have been done under private 
enterprise ? 



44 MANUAL TO 

16. Describe some of the methods used in European 
countries for removing the inefficiencies of the competitive 
systems. 

Chapter XXX 

1. What is an utopia? 

%. What is meant by a Dynamic Society? 

3. Why are Utopias written ? 

4. Why have practically all communistic experiments 
failed ? 

5. Do these failures prove the impossibility of com- 
munism ? 

6. Ignorant people frequently believe that socialism 
means the pooling of all wealth and then a redistribution 
in equal portions. Does this remotely resemble a fair 
account of socialism ? 

7. Why is it difficult to define the word socialism? 

8 . What criticism do socialists make of the present system ? 

9. What is the socialist's idea of life ? 

10. Do socialists wish to abolish luxury? 

11. Is the criticism that the present method of organizing 
industry results in waste justified? 

12. What do you think of the expression "the divinity 
of labor '*? 

13. What advantages result from an increase in leisure ? 

14. What effect have long hours upon efficiency of labor ? 
upon accidents ? 

15. Is advertising waste? What economic justification 
can you suggest for advertising? 

16. State and explain the central idea of socialism. 

17. What is meant by revolutionary socialism ? 

18. Are revolutions always to be avoided? 

19. Describe the principles of State Socialism. 

20. Can you give any illustrations of the practical work- 
ing of State Socialism? 



AN INTRODUCTION TO ECONOMICS 45 

21. Is government administration uniformly worse than 
private ? 

22. Examine the chief objections to State Sociahsm. 

23. What is Guild Socialism? How does it differ from 
State Sociahsm ? 

24. Discuss any recent suggestion for the introduction 
of the guild socialist idea into America. 

25. What attitude should the student adopt toward 
suggestions for the improvement or reorganization of 
society ? 



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